Charlie Javice, the founder of a startup company that sought to dramatically improve how students apply for financial aid, was sentenced Monday to more than seven years in prison for cheating JPMorgan Chase out of $175 million by greatly exaggerating how many students it served.
Javice, 33, was sentenced in Manhattan federal court for her March conviction by Judge Alvin K. Hellerstein, who said she committed “a large fraud” by duping the bank giant in the summer of 2021. She made false records that made it seem the company, called Frank, had over 4 million customers when it had fewer than 300,000, Hellerstein found.
The judge said Javice had assembled a “very powerful list” of her charitable acts, which included organizing soup kitchens for the homeless when she was 7 years old and designing career programs for formerly incarcerated women.
In court papers, defense lawyers noted that Javice has faced extraordinary public scrutiny, reputational destruction and professional exile, “making her a household name” in the same way Elizabeth Holmes became synonymous with her blood-testing company, Theranos.
Defense attorney Ronald Sullivan told Hellerstein that his client was very different from Holmes because what she created actually worked, unlike Holmes, “who did not have a real company” and whose product “in fact endangered patients.”
In seeking a 12-year prison sentence for Javice, prosecutors cited a 2022 text Javice sent to a colleague in which she called it “ridiculous” that Holmes got over 11 years in prison.
Hellerstein largely dismissed arguments that he should be lenient because the acquisition pitted “a 28-year-old versus 300 investment bankers from the largest bank in the world,” as Sullivan put it.
Still, the judge criticized the bank, saying “they have a lot to blame themselves” after failing to do adequate due diligence. He quickly added, though, that he was “punishing her conduct and not JPMorgan’s stupidity.”
Sullivan said the bank rushed its negotiations because it feared another bank would acquire Frank first.
A prosecutor, Micah Fergenson, though, said JPMorgan “didn’t get a functioning business” in exchange for its investment. “They acquired a crime scene.”
Fergenson said Javice was driven by greed when she saw that she could pocket $29 million from the sale of her company.
“Ms. Javice had it dangling in front of her and she lied to get it,” he said.
Given a chance to speak, Javice said she was “haunted that my failure has transformed something meaningful into something infamous.” She said she “made a choice that I will spend my entire life regretting.”
Javice, sometimes speaking through tears, apologized and sought forgiveness from “all the people touched or tarnished by my actions,” including JPMorgan shareholders, Frank employees and investors, along with her family.
Javice, who lives in Florida, has been free on $2 million bail since her 2023 arrest.
At trial, Javice, a graduate of the University of Pennsylvania’s Wharton School of Business, was convicted of conspiracy, bank fraud and wire fraud charges. Her lawyers had argued that JPMorgan went after Javice because it had buyer’s remorse.
In her mid-20s, Javice founded Frank, a company with software that promised to simplify the arduous process of filling out the Free Application for Federal Student Aid, a complex government form used by students to apply for aid for college or graduate school.
Frank’s backers included venture capitalist Michael Eisenberg. The company said its offering, akin to online tax preparation software, could help students maximize financial aid while making the application process less painful.
The company promoted itself as a way for financially needy students to obtain more aid faster, in return for a few hundred dollars in fees. Javice appeared regularly on cable news programs to boost Frank’s profile, once appearing on Forbes’ “30 Under 30” list before JPMorgan bought the startup in 2021.
Javice was among a number of young tech executives who vaulted to fame with supposedly disruptive or transformative companies, only to see them collapse amid questions about whether they had engaged in puffery and fraud while dealing with investors.
In their pre-sentence submission, prosecutors wrote that they were requesting a lengthy prison sentence to send a message that fraud in the sale of startup companies is “no less blameworthy than other types of fraud and will be punished accordingly.”
Prosecutors added that the message was “desperately needed” because of “an alarming trend of founders and executives of small startup companies engaging in fraud, including making misrepresentations about their companies’ core products or services, in order to make their companies attractive targets for investors and/or buyers.”
